Bestinvest turns its guns on the pensions industry with new report that ‘names and shames’ £31 billion underachieving funds

20 October 2013
 

(In)famous for shining a light on the problem of investment funds that have consistently performed poorly, leading private client investment firm Bestinvest is set to turn its attention on the UK pensions industry with the publication this weekend of a damning new report: Spot the Dog Pensions Edition. Available to download for free at www.bestinvest.co.uk/spot-pensions, the report will be essential reading for anyone who is unsure how their pension plans are performing.

The inaugural Spot the Dog Pensions Edition has identified 113 pension funds with combined assets totalling approximately £31 billion that have consistently underperformed. To earn a place in the report funds must have failed to beat their benchmark* over three consecutive 12-month periods in succession and also by more than 10% over three years. Bestinvest cautions that these filters are designed to highlight the “worst of the worst” and that there are many more funds out there delivering pedestrian returns, so the report merely represents the tip of an iceberg.

The report also names a set of 40 funds in four major Association of British Insurers pension fund sectors that it has dubbed the “Long-Term Laggards”. These have undershot the average fund in each sector by more than 20% or more over the last decade.

Many of the dullards highlighted in the report are “legacy” pension funds, acquired by pension fund consolidator firms who have taken-on assets from former life and pension providers that have closed to new business.

David Smith, Wealth Management Director at Bestinvest, commented: “For many, the world of pensions is shrouded in mystery. Plans are rarely reviewed and even forgotten about. In some cases investors may own funds that are now in the hands of completely different organisations from those they originally invested with, as a result of consolidators operating in the pensions industry.”

“Many savers are quietly suffering the tyranny of opaque charges and poor performance. This inertia is partly down to the fact that past generations often received a pension based on a percentage of their salary, so there was little incentive to look beneath the bonnet. But the world has changed.”

“The last 20 years have seen a huge transfer of risk and responsibility away from employers and on to the shoulders of individuals. Except for the lucky few, gone are the days of gold-plated final salary pensions. Instead, these have been replaced with pensions where, although the company might contribute to the plan, the uncertainty and risk sits firmly with the individual.”

“The performance of your pension funds therefore really does matter as the price of tolerating poor performance will quite literally be a worse off lifestyle in your retirement. And with people thankfully living longer, their pension savings need to work much harder for them to ensure they have sufficient resources to see them through their retirement years.”

“Spot the Dog Pensions Edition is a wake-up call: your pensions are too important to ignore and you do not have to put up with dire performance.”


*Either a relevant market index such as the FTSE All Share or in the case of managed funds, which invest across various asset classes, the relevant ABI sector average returns.


Readers offer: Members of the public can get a free copy of Spot the Dog Pensions edition either by downloading it from www.bestinvest.co.uk/spot-pensions or by calling 020 7189 2400 to request a copy.

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About Bestinvest:
Founded in 1986, Bestinvest has grown to become a leading private client investment adviser, looking after £5 billion of assets for more than 50,000 clients. We offer a range of investment services from Select for self-directed investors to Investment Advisory and Investment Management services for clients who do not have the time or inclination to manage their own investments.

All of our services are underpinned by rigorous research aimed at identifying those fund managers we believe will deliver long-term superior performance. We also have a team of expert financial planners with nationwide coverage to help clients with their pensions, retirement or Inheritance Tax planning. At Bestinvest, we pride ourselves on offering the highest levels of professionalism and expertise with transparent, competitive prices. We are pleased that our greatest source of new business is from personal referrals from existing clients.

Bestinvest has won numerous awards including UK Wealth Manager of the Year 2013, Best Wealth Manager for Investments 2013, Best Stockbroker for Customer Service 2012 and 2011 Self Select ISA Provider of the Year as voted by readers of the Investors Chronicle and the Financial Times.

Headquartered in Mayfair, London, Bestinvest employs more than 200 staff and has an extensive network of regional offices. The company is one of the fastest-growing private client advisory firms.

About Tilney

Tilney is a leading investment and financial planning firm that builds on a heritage of more than 150 years. The Tilney Group operates under the Tilney brand for Investment Management and Financial Planning and Bestinvest for execution-only investing. We look after more than £22 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including Best Fund Platform and Best SIPP Provider at the 2017 City of London Wealth Management Awards; Investment Award – Cautious category in the Private Asset Management Awards; and Stockbroker of the Year, Execution-only Stockbroker of the Year and Self-select ISA Provider of the Year 2015, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Group employs over 1,000 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.